April 30 , 2014

Steve A. Knizner , Acting Director Toxics Release Inventory Program Division U.S. Environmental Protection Agency William Jefferson Clinton Building

1200 Pennsylvania Avenue, N.W.

Mail Code: 2844T Washington, DC 20460

SUBJECT : Response to “Petition to Add the Oil and Gas Extraction Industry, Standard

Industrial Classification Code 13, to the List of Facilities Required to Report under the Toxics Release Inventory” (Oct. 24, 2012) and Supplemental Submission (Jan. 30, 2 014), Docket ID No. EPA

- HQ

- TRI

- 2013

- 0281.

Dear Acting Director Knizner:

The American Petroleum Institute (“API”) appreciates this opportunity to respond to the October
24, 2012 petition 1 filed by the Environmental Integrity Project and sixteen other orga nizations (collectively, “EIP”) and EIP’s January 30, 2014 supplement to that petition. 2 In its petition, EIP

asks the Environmental Protection Agency (“EPA”) to initiate a rulemaking to add Standard Industrial Classification Code 13 (“SIC Code 13”) and v arious North American Industry Classification System (“NAICS”) codes to the list of industries subject to reporting under the Toxics Release Inventory (“TRI”) of the Environmental Planning and Community Right

- to

Know Act (“EPCRA”). These industry codes en compass, generally, the oil and gas exploration and production industry (“E&P industry”).

API is a national trade association representing over 600 member companies involved in all aspects of the oil and natural gas industry. API’s members include produce rs, refiners, suppliers, pipeline operators, and marine transporters, as well as service and supply companies that support all segments of the industry. API and its members are dedicated to protecting the environment while economically developing and suppl ying energy resources for consumers. API members carry out operations for safe and environmentally responsible exploration and production of natural gas, crude oil, and associated liquids.

1 Environmental Integrity Project, “Petition to Add the Oil and Gas Extraction Industry, Standard Industrial Classification Code 13, to the List of Facilities Required to Report under the Toxics Release Inventory” (Oct. 24, 2012) (“EIP Petition”).

2 EIP, “ Re: Petition to Add the Oil and Gas Extraction Industry, Standard Industrial Classification Code 13, to the List of Facilities Required to Report under the Toxics Release Inventory” (Jan. 30, 2014). Erik Milito

Group Director Upstream and Industry Operations

1220 L Street, NW Washington, DC 20005

- 4070
USA

Telephone 202

- 682

- 8273
Fax 202

- 682

- 8426

Email militoe@api.org www.api.orgAction Director Knizner

April 30 , 2014 Page Two

For the reasons discussed below, API strongly disagrees that EPA should initiate a rulemaking to

add the E&P industry to the TRI program. This submission is not an exhaustive presentation of

API’s arguments against EIP’s petition and supplement but is ins tead intended to address certain key areas in which API believes mo re information would assist EPA in making its decision.

I. EPA’s 1996 Decision Not to Add E&P to TRI Reporting

In 1996, EPA decided not to include the E&P industry in the list of industries r equired to report information under the TRI program. 3 At that time, EPA explained that it was not adding the E&P industry to the TRI program because the industry is “unique” and “ neither the employee

nor the chemical thresholds [under the TRI program] are likely to be met .” 4
There has not been such a change in the E&P industry that EPA should deviate from its 1996 decision. In both of its submissions, EIP contends, in effect, that EPA should sweep the entire E&P industry into the TRI program based on a small portion of the industry’s facilities. EIP’s January 2014 submission focuses on a particularly limited subset of those facilities. As explained below, a more complete view of the E&P industry supports the same conclusion that EPA reached when it p reviously considered the issue.

II. A Rulemaking to Add E&P to TRI Reporting is Not Warranted

EPCRA Section 313(b)(1)(B) 5 establishes the standard that EPA must follow when it add s or

removes industries to or from the TRI program , stating that the Administrator may add SIC Codes to the TRI program “only to the extent necessary” and where the addition would be “relevant to the TRI program.” For several reasons, the addition of the E&P industry to the TRI program is neither necessary nor relevant to the program.

A. EIP Improperly Attempts to Expand the Statutory Definition of Facility

The EPCRA definition of “facility” includes only “buildings, equipment, structures, and other stationary items” that are “ located on a single site or on contiguous or adja cent sites .” 6 EIP’s proposed expansion of that definition in its original petition directly contradicts the clear meaning of the statute. EIP improperly attempts to aggregate a vast number of non

- contiguous

and non

- adjacent sites in its attempt to create “facilities” that, only if aggregated, might meet the TRI reporting thresholds.

EIP’s legal argument for expanding the statutory definition of facility is unsupported. Sierra Club v. Tyson Foods , which EIP cites in support of its argument, addressed chicken production

3 61 Fed. Reg. 33,588, 33,592 (June 27, 1996).

4 Id.

5 42 U.S.C. § 11023(b)(1)(B).

6 Id. § 11049(4) (emphasis added).Acting Director Knizner

April 30 , 2014 Page Three

facilities that were within 50 to 60 feet of each other on a single farm. 7 On the contrary, most

E&P sites are scattered across parcels owned by many different landowners, separated b y unrelated parcels. As both the Marcellus Shale Coalition (“MSC”) and the Washington Legal Foundation noted in their comments on EIP’s original petition, Summit Petroleum Corp. v. EPA provides a better view of when multiple facilities may be viewed as on e, concluding that the plain meaning of the term “adjacent” refers to a close physical and geographic relationship. 8
Such a close relationship is similarly required under EPCRA.

EIP’s attempt to analogize to EPA’s greenhouse gas reporting (“GHG”) rules is also inapt. For GHG reporting, EPA indeed considers E&P facilities at the basin level, as opposed to the well

level. 9 As MSC explained in its comments, however, EPA was not constrained by EPCRA’s definition of “facility” in promulgating the GHG repor ting rules. 10 Furthermore, the basin approach is more consistent with the national policy concerns motivating the GHG reporting rules, as opposed to TRI reporting, which concerns local communities. 11 Simply put, basin

- level reporting for GHGs has no bearin g on the aggregation of facilities under the TRI program.

API further supports MSC’s criticism of EIP’s factual analysis of the proximity of wells. 12 For example, e ven accepting EIP’s factual assertion that there were 137 wells within a 3.5

- mile radius at Dimock, Pennsylvania, in December 2011, EIP’s analysis fails to acknowledge that a

3.5

- mile radius correlates to a 38.5 square mile area. 13 Such an expansive area m eans that, on average, each well would be separated by over a quarter mile. And, as EIP acknowledges, “a large number of these wells are co

- located in clusters of two to five wells per well site,” 14 which means that the average distance between well sites would be even greater. These well sites, like most E&P facilities, are not contiguous or adjacent and therefore cannot be considered a single facility under EPCRA’s definition of “facility.”

B. Relatively Few E&P Facilities May Have Sufficient Full

- Time Emp loyees to be Subject
to the TRI Program

7 Sierra Club v. Tyson Foods , 299 F. Supp. 2d 693, 699

- 700 (W.D. Ky. 2003).

8 Summit Petroleum Corp. v. EPA , 690 F.3d 733, 741

- 44 (6th Cir. 2012); see also Washington Legal Foundation,

“Re: Petit ion to Add the Oil and Gas Extraction Industry, Standard Industrial Code 13, to the List of Facilities Required to Report under the Toxics Release Inventory” at 1

- 2 (Jan. 8, 2013); Marcellus Shale Coalition, “Response

to Petition to Add the Oil and Gas Ext raction Industry, Standard Industrial Code 13, to the List of Facilities Required to Report under the Toxics Release Inventory” at 4 (Dec. 18, 2012) (“MSC Comments”).

9 40 CFR § 98.238.

10 MSC Comments at 5

- 6.

11 Id.

12 Id. at 5.

13 Id.

14 EIP Petition at 68.Acting Director Knizner

April 30 , 2014 Page Four

In its 1996 comments, API questioned whether E&P sites meet the full

- time employee (“FTE”) threshold for TRI reporting. 15 This question remains viable today. As in 1996, many E&P sites are unlikely to meet the FTE requirement at any time. For other sites, much of the labor

intensive activity is focused on a limited portion of the site’s existence. Once drilling and compl etions operations conclude at a well, fewer than 10 employees may access the site over the course of any given year during the many years that a well produces hydrocarbons.

In its original petition, EIP asks EPA to sweep the entire E&P industry into the T RI program based on facilities that may only meet the FTE requirement during a fraction of their operations, if ever. Its supplement to the petition does the same with respect to facilities that make up a small percentage of all E&P facilities. Adding th e entire E&P industry to the TRI program is unwarranted considering that it would create an administrative burden on both the regulated industry and EPA while providing only a negligible benefit. 16

C. EIP’s Data Does Not Support its Conclusions Regarding Use of Chemicals at Facilities

EIP argues that data from existing reporting supports its conclusion that E&P facilities use sufficient listed chemicals to meet the thresholds set by the TRI program. API reiterates MSC’s argument that EIP misapplied the TRI th resholds in its original petition. 17 EPCRA Section 313(f) 18 sets thresholds not on an aggregate basis but instead on a per

- chemical or per

- chemical category basis. For example, to satisfy the “otherwise use” threshold for TRI reporting, a facility

must use 10,000 pounds of any one listed chemical or chemical category, not a total of 10,000 pounds of all listed chemicals. EIP’s original petition fails to show that any given facility has met any of the TRI chemical thresholds.

In its supplemental petition, EIP points to existing reporting data for its argument that certain larger E&P facilities may meet the TRI thresholds on a per

- chemical basis. As noted above, these facilities make up a small percentage of the facilities within the E&P industry. API has not yet conducted an analysis to verify the accuracy of the data that EIP has presented in the supplement to its petition. Even assuming that the data is accurate, however, it does not support adding the entire E&P industry to the TRI program. The fact t hat a small percentage of facilities within an industry may meet the TRI chemical threshold does not justify adding the industry to the TRI program. Again, such an addition would produce limited benefits while imposing an

administrative burden on both the regulated industry and EPA.

15 API, “Re: Proposed Rule to Expand SIC Codes Reportable under Section 313 of the Emergency Planning and Community Right

- to

- Know Act” at 4

- 6 (Sept. 19, 1996) (“1996 API Comments”).

16 In particular, as API explained in 1996, tracking contractors’ hours to determine whether a particular well site meets the TRI program’s full

- time employee threshold would require E&P operators to create entirely new systems

for a limited benefit. 1996 API Comments at 4

- 6.

17 MSC Comments at 7.

18 42 U.S.C. § 11023(f).Acting Director Knizner

April 30 , 2014 Page Five

D. Addition of the E&P Industry Would Not Be Relevant to the Purposes of the TRI
Program

Pursuant to EPCRA Section 313(b)(1)(B), 19 EPA may only add industries to the TRI program if the addition “is relevant to the purposes of [the TRI program].” Congress established EPCRA, including the TRI program, in response to serious chemical releases at major industrial facilities,

such as the 1984 release from a chemical plant in Bhopal, India, which killed thousands of people, and a release from a similar plant in West Virginia the following year. 20

Adding the E&P industry to the TRI program would have limited relevance to the program’s

purpo ses. It would produce limited relevant information because, as discussed above, only a small percentage of E&P facilities are likely to meet the TRI reporting thresholds. Furthermore, E&P facilities are generally located away from human populations, in u ninhabited rural areas, offshore platforms, and remote installat ions. Including those facilities in the TRI program would not be relevant to the program’s purposes because it would not provide information to communities as the TRI program intended

. Final ly, E&P facilities are not the type of major industrial facilities, like the facilities in Bhopal and West Virginia, that were at issue when Congress established the TRI program.

In addition, at least two developments since EIP filed its original petiti on significantly undercut its policy arguments for adding the E&P industry to the TRI program. First, EPA has increased its regulation of air emissions for E&P facilities. Those rules are expected to reduce emissions from E&P facilities; 21 to the extent t hat EIP’s analysis relies on emissions reports as an indication that E&P facilities emit listed chemicals in such quantities that TRI reporting is relevant to the purposes of the TRI program, those numbers are not likely to reflect emissions in the coming years. Second, EIP’s petition relies significantly on assertions about potential groundwater contamination from hydraulic fracturing. 22 Subsequently, n umerous officials from
EPA, BLM, DOI, and other federal agencies have stated, including in testimony to Congress, that there have been no confirmed cases of hydraulic fracturing impacting groundwater

. 23

III. Conclusion

19 Id. § 11023(b)(1)(B).

20 EPA, Learn about the Toxics Release Inventory

, http://www2.epa.gov/toxics

- release

- inventory

- tri

- program/learn

about

- toxics

- release

- inventory (last visited April 18, 2014).

21 See, e.g. , EPA, Oil and Natural Gas Pollution Standards , http:// www.epa.gov/airquality/oilandgas/ (stating that EPA expects its new regulations “to reduce harmful air pollution from the oil and natural gas industry”) (last visited April 18, 2014)

. 22 EIP Petition at 41

- 50.

23 See API, “Oil and Gas; Hydraulic Fracturing o n Federal and Indian Lands, 78 Fed. Reg. 31,635 (May 24, 2013).

RIN 1004

- AE26” at 5

- 6 (Aug. 23, 2013) (listing statements by EPA Administrator Gina McCarthy, among others).Acting Director Knizner

April 30 , 2014 Page Six

For the reasons explained above, adding the E&P industry to the TRI program would not be appropriate. Imposing the TRI reporting requirements on this industry would not support the purpose of the TRI program, would present limited potential benefits, and would impose burdens on the regulated community and EPA. 24 Accordingly, API strongly disa grees that EPA should initiate a rulemaking to add the E&P industry to the TRI program.

Should you have any questions regarding API’s comments, please do not hesitate to contact me. We would be happy to meet with your staff and you to further discuss our positions , if that would be helpful as you evaluate this important issue

.

Regards,

Erik Milito Group Director Upstream and Industry Operations

cc: Kevin Minoli, Acting Principal Deputy General Counsel , U.S. Environmental Protection Agency

24 In 1996, API estimated that the costs for the E&P industry to comply with TRI rep orting would be $200 million for the first year and $100 million for each subsequent year. 1996 API Comments at 10. The Department of Energy’s estimate at that time was significantly higher, in the billions of dollars. Id. As the industry has grown

s ince that time, the compliance costs today would likely be even higher.